I made a Ton of Money Flipping House’s – Oh Yeah?

” Gold I tell you there’s Gold in them thar Hills!” Yes there is excitement in the air and much like the days of the Hollywood westerns a call to action. Gold? Well, maybe and maybe not. Certainly there is a profit to be made for the well prepared Real Estate Fixer Buyer. Is this You? Or will you just be one of the countless stories of failure.

Real estate investments in Fixer’s Flips and Rehabs be it Short Sales and or Foreclosures or in the Derelict/Abandoned homes  market can be very lucrative, If you know what you are doing.

It is that IF that separates the Men from the Boys so to speak. Even with the most experienced of us all there are mistakes made and money lost. But there are many things you can do to help eliminate those losses are at least lessen there effects on your bottom line.

Taking a seminar and listening to the rags to riches stories is one of the sure fire ways to quickly lose your shirt. They may be very motivating and fun to listen to but they are no recipe for success. While education is all good and well you can be over educated as well.

One simple plan that can set you on the right path is to look at investing in Real Estate as a Team Sport. Who would you pick to be on your team, assuming that you have done all of the preliminary work such as financing etc.

The Workers :

1. You ( will or can you do the work)
2. Contractor ( Save your self some headache early on a hire a Licensed Contractor for those jobs that you yourself are not capable of doing )
3. Special Contractors ( Roofer, Electrician, Plumber, HVAC, etc.) You do not have to have these people on the pay roll or at your beck and call but you should at least have done the leg work to check out the quality of work they can do and to compare their prices.
4. Real Estate Agent. ( Did you know that a good real estate agent can make you or break you in the Fixer and Flips market?)

Choosing the right Contractors and Real Estate Agent have many parallels. Your entire team should understand your goals. No member of the team including you should put their needs ahead of the others. A good team understands their place and the places of the other members.

So you have assembled your team and you’re ready to go! What then is a 365 Real Estate Investor? Given that there are only 365 days ( more or less ) in a year a budget needs to be set to meet your goals.

• How much money do you want to make per year after all expenses are paid?
• How much profit is there per project?
• How many projects will it take to reach my goal?

Experience is of course the best teacher. Start small and do not get carried away on that first project. Take on one that even if you fail will not take you down don’t let Greed get in front of the learning curve or your common sense. Build upon your successes for they are the foundation for a bright and profitable future in the world of Fixers and Flips.

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” A Real Estate Transaction with Herb is one YOU will Profit from “

Short Sales and Foreclosures

Short sales and foreclosures in Portland Oregon are a fact of life. There are many factors that can lead you down the path towards a short sale or foreclosure. Some paths are created by others. Some may be of your own doing. Joe and Rita not only created that path they made sure the path was full of bumps and pit-falls along the way! Today on THE PICKLE ! Who_Loves_Short_Shorts

Why is This the Time to Buy Real Estate

Yesterday I posted an article about the real estate market in Portland Oregon . I expressed my oppinion that it was A_Good_Time_TO_Buy_Real_Estate . A reader challenges that oppinion with a resounding ” are you kidding me ” referrencing an article of the rise in foreclosure rates in Portland and around the country.

It is a good question and one that deserves a good answer. Throughout the entire history of mankind, there has never been a moment where man has bitten off more than he could chew. In todays fast paced society and an eagerness of most everyone to have instant gratification to there life styles, prudent purchases are often over looked. It is quite easy to get caught up in the ” everyone is doing it ” menatlity. That does not mean that it shows fiscal responsibility.

In short there is nothing that can be done to those who have walked to the end of the plank only to see it sawed off behind them.

The percentage of those that have done so is a substantial amount. However the larger percentage of consumers have not and there should be no reason at all for anyone who wants to purchase a home to delay that purchase. Interest rates are still very low, Tammy_Wittren_of_Northwest_Mortgage  a mortgage Broker/Banker specializes in loans taylor made to the Portland Market would be happy to update you with the current rates.

The reasons to purchase now and why this is a great time to buy are for the following reasons :

• The past two years real estate across most of the country has been depressed and in some cases a major decline.
• Real Estate is now begining to show a comeback and a rise in prices in many locations
• For those Sellers who have had there home on the market for a while without an offer , they may be willing to look at strong buyer more than there asking price.
• With the market improving real estate sales prices will soon begin to go up.
• Seeings how the real estate market in Portland has not been affected as the rest of the country, the rise in prices here will most likely be more severe than other parts of the nation.

So just like the stock market the time to buy is when it is at its lowest or close to its lowest. Not after it has already made the turn and you have missed out. For those that have been in the real estate market in the Portland Oregon area for any time can testify to. Once the market begins that upward surge it can make leaps and bounds in the tens of thousands very quickly. Unlike reductions that are done in smaller amounts and reluctanly by sellers.

Is this the right time to buy? The answer is a resounding YES! For as you have seen in my previous post the last 12 months ending in April showed an appreciation rate above 11% in Portland. Using that number only and not any additional percentage that might happen should the market take off again, 11% a year on a $300,000 home is $33,000. Or $16,500 for 6 months or $8,250 for 3 months. So every 90 days you wait you are in effect losing $8,250 worth of buying power.

Let_Your_Next_Home_Find_You  

The Short Sale Nightmare Pt. 2 Dan Wins

Staying focused on the prize is the key to working foreclosed properties and or short sales. Never let your emotions rule the day. Lenders are normally heavily bureaucratically laden and have a myriad of details to follow through. Hence the reason why Lender’s will go out of there way to work with a Homeowner rather than to foreclose and take the property back

In the case of the Victorian home in Mt. Tabor Portland Oregon for Dan, the Seller had chosen not to work it out with the Lender. They just wanted out and did not care what the consequences might be.

I was very fortunated in this case to be working with a Lender who’s department head was not on vacation or dashing out to some conference in Brazil. This individual was on top of her game. She was attentive and often new the current status of the inventory that she had to work with.

In the case of the Victorian home the seller had recently refinanced the home taking some of the equity out only 90 days previously to our offer. With out going into the gory details, suffice it to say he had spent all of the money ( can you say party on man ).

Armed with the knowledge of what the Lender would be interested in looking for should they decide to work with my buyer Dan, I set about by providing it.

• Dan hired a company to do a Full Home Inspection, We gave a copy to the Lender.
• From the Inspection Dan’s construction company gave a bid for the work.
• I also provided detailed bids from the sub-contractors that would be doing work.
• I created an accurate Market Analysis for the property, and sent it to the Lender.
• Provided open lines of communication between the Lender and my self always answering the phone when they called with questions.

The Lender reviewed all of the documentation given and requested an extension of time to do an appraisal review of the previous appraisal and to schedule to new appraisals.

The end results were that the Market analysis that I prepared were almost exactly the same conclussion drawn by the two independent appraisals done by the Lender.

The Lender subsequently accepted Dan’s offer some $60,000 below what they were owed. Closing took place only 45 days longer than anticipated.

Yes Short Sale’s and Foreclosures can be a Nightmare, but if you keep your head in the game and can work through the bureaucracy without becoming frustrated, there are opportunities to be had.

The Short Sale Nightmare Caught by Suprise

Just about the time that Dan my Investor was trying to figure out how he was going to manage all of the repairs that had shown up in the Home Inspection report for the Older Victorian home on Mt. Tabor in Portland Oregon the Title report arrived with some alarming news. It seems as if the Seller of this fixer upper had created several liens against the property in excess of the amount of the property’s equity.

As a real estate Broker with 19 years of expierience in selling  portland oregon real estate to investors, I know that often times liens that are on a title report are not always relevant. A further search of the liens status and amounts owed would tell the tale. Meanwhile I put a call into the listing agent to see what they knew of the property.

Nothing was the response that I got back. Nothing accept a letter the Seller had recieved from the Lender this morning in regards to default and foreclosure.  I told Dan not to stress that I would call him as soon as the clarification came from the title report. The following morning the title company called and sent me the lien search with amounts owed. The total amount was $60,000 more than the accepted offer of the home. The Lender had issued the pre-foreclosure letter just three days earlier. This is good news as we are in the early stages.

So this leaves us with basically 3 choices. :

1. The Buyer could choose to pay the additional $60,000. (not realistic but an option)
2. The Seller could pay the default amount at closing. ( could but had no money to do so)
3. The lender could be involved and reduce there amount they are owed.

This is what is known as a short sale. Certainly the listing agent should have done his due diligence and known of this potential problem before listing the home for sale. Obviously he did not and we were left to solve the problem now at hand if it could be solved rather than just to point the finger in a blame game.

Solving the short sale problem is different from lender to lender. Reason and rationality are not always part of the equation. Typically the solution will be written down in the lender’s own guidelines and they will often adhere to those policies even if it is to their detriment.

Some of the keys to working with short sales :

• Maintain a positive productive attitude.
• Do not show frustration or try to lecture the Lender as to how you think it should work.
• Suggest solutions and then wait for approval from the Lender before implementing them.
• Find out what the Lender’s policy for short sales is and follow them.
• Make sure you are in direct communication with those that make the decisions. Not just someone who answers the phone.
• Provide all pertinent information about your buyer that will help the Lender view you as credible.
• Make sure you have the complete understanding and approval from your buyer as to the length of time and complexity of this sale.

Next time in Part 2 Dan works towards the prize.